Car Refinancing
Bad credit acceptedNo impact on credit scoreCar refinancing replaces an existing car finance agreement with a new deal at a lower APR (Annual Percentage Rate). Car-Finance.co.uk compares refinancing offers from 15+ UK lenders, with bad credit accepted. The initial eligibility check uses a soft credit search and does not affect your credit score. A full credit check will be carried out by the lender if you proceed to a formal application.
Soft credit search only
A full credit check will be carried out by the lender if you proceed to a formal application.
Last Updated: June 2026
How to get car refinancing?
Apply
Get approved
Switch and save
We work with 15+ trusted UK car finance lenders
We work with over 15 lenders offering 100+ HP and PCP deals so that you could have the best offer.
We are credit brocker, not a lender.
Car refinancing calculator
With the help of the calculator you can roughly estimate possible car loan options.
Finance calculator
- 36 mo
- 42 mo
- 48 mo
- 60 mo
Your estimated examples
Representative example: Borrowing £9,000 over 60 months with a representative APR of 23.9%, monthly payment of £234.61, total cost of credit £5,076.60, total amount payable £14,076.60. Rates from 9.9% APR. We are a credit broker, not a lender.
With the help of the calculator you can roughly estimate possible car loan options.
What is car refinancing?
Car refinancing is a UK consumer credit product. The process replaces an existing car finance agreement with a new loan secured against the same vehicle. The new lender pays off the original agreement. You then make monthly payments under fresh terms, typically at a lower APR.
Three groups of UK drivers most often refinance their car loans. The first group is borrowers whose credit score has risen since their original application. A higher score usually qualifies them for lower-APR offers.
The second group is drivers who signed a high-APR deal at the dealership and want a cheaper rate. The third group is PCP customers approaching the balloon payment who want to keep the car.
Car-Finance.co.uk compares three refinancing routes in a single search: HP refinancing , PCP refinancing, and personal loan refinancing. Personal Contract Hire (PCH) falls outside refinancing because PCH is a rental, not a credit agreement. The customer never owns the vehicle in a PCH contract, so there is no underlying loan to replace.
How do car refinancing payments work?
Car refinancing closes your existing agreement and opens a new one with a different lender. The new lender pays your settlement figure to the original finance company. You then pay the new lender each month under the new APR and term.
For example, take £8,000 remaining at 9.9% APR over 36 months. The monthly payment is roughly £258. Refinanced to 5.9% APR over the same 36-month term, the payment falls to about £243. The total saving is around £540 across the term.
Five factors shape the new monthly payment:
- The current loan balance shown on your settlement figure
- The new APR offered by the refinancing lender
- The remaining term (shorter terms cut total interest)
- Early repayment charges on the existing agreement
- Arrangement fees on the new deal
The refinancing process runs in four steps:
- Request a settlement figure from your current lender.Section 97 of the Consumer Credit Act 1974 mandates this on request. The figure is valid for 28 days.
- The new lender runs a soft credit search and gives you an eligibility decision.
- On approval, the new lender pays off your existing agreement directly.
- Your new monthly payments begin.
HP refinancing vs PCP refinancing vs personal loan
Three main car refinancing routes operate in the UK. Each route suits different goals and credit profiles. The table below compares the structural features on the same vehicle.
| Feature | HP refinancing | PCP refinancing | Personal loan refinancing |
|---|---|---|---|
| Own the car at end of term | automatically | Only if you pay the balloon payment | from day one of the new loan |
| Monthly payment level | Higher than PCP | Lower than HP | Variable, depends on APR and term |
| Balloon payment required | at end of term | ||
| Total cost of credit | Lower than PCP at same APR | Higher due to balloon plus interest | Lowest if APR is below HP and PCP |
| Secured against vehicle | an unsecured loan | ||
| Early repayment option | under Consumer Credit Act 1974 | under Consumer Credit Act 1974 | terms vary by lender |
| Best suited for | Drivers who want lower APR and keep ownership structure | Drivers near a PCP balloon payment they cannot pay | Drivers with a strong credit score who want full ownership |
Total cost of credit is the right metric when comparing refinancing routes, not monthly payment alone. A longer term lowers the monthly cost but raises total interest paid. Run a soft eligibility check before committing to any new agreement.
The pros and cons of car refinancing
Car refinancing carries clear benefits for the right borrower. It also carries real risks worth weighing before signing the new agreement.
Pros
Lower APR cuts total interest and reduces the monthly payment- PCP refinancing converts the balloon payment into manageable monthly instalments
- An improved credit score may qualify you for rates unavailable at the original application
- Switching from HP to a personal loan removes the lender's security and gives outright ownership from day one
- Refinancing can shorten the remaining term and clear the debt faster
Cons
Early repayment charges on the existing agreement can offset the saving- Extending the term lowers monthly cost but raises total interest paid
- A full credit search at formal application causes a small temporary dip in your credit score
- HP voluntary termination rights (50% rule, Consumer Credit Act 1974, Section 99) reset under the new agreement
- Vehicle age and mileage caps mean older cars may not qualify with mainstream lenders
Refinancing saves money only when the new APR plus fees costs less than the remaining interest on the existing deal. Always compare the total cost of credit, not the monthly payment alone, before proceeding.
Can I get car refinancing?
Most UK refinancing lenders apply five core eligibility criteria, plus vehicle-specific limits:
- Aged 18 to 75 at the start of the new agreement
- UK resident with three years of recent address history
- Regular income from employment, self-employment, pension, or eligible benefits
- Valid UK driving licence
- A minimum of 12 months into the existing finance agreement
Vehicle criteria vary by lender. Most lenders accept cars under 10 years old at the end of the new term. The mileage cap is around 100,000 miles. There is no minimum credit score requirement on the Car-Finance.co.uk panel.
Specialist lenders such as Moneybarn and Oodle consider applicants with adverse credit. The accepted profiles include County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs), and missed payments. Self-employed applicants may also need car insurance arranged separately, for example through carinsuranceplus.co.uk.
Why choose us?
We offer many favourable car loan options for your needs and select the best deals from reliable providers
Get your car finance online
No impact on your credit score.
Buy a car from any dealer
Collect or get delivered.
Car finance quality assured
HPI check, full-service history, MOT check.
15+ lenders compared
We find your best rate automatically.
FCA authorised
Free service, no hidden fees.
Same day decision
Apply in minutes, drive today.
Refinancing specialists
We compare HP, PCP and personal loan refinancing options in one search.
FAQ
We've collected the most popular questions about car loans from our customers.
Can I get car refinancing with bad credit?
Yes, specialist UK lenders consider applicants with a CCJ, IVA, or a history of missed payments. A poor credit score narrows the options and raises the APR, but it does not disqualify you. Run a soft eligibility check first to see which lenders may accept you before any hard credit search.
Does applying for car refinancing affect my credit score?
A soft credit search does not affect your credit score. A full credit check will be carried out by the lender if you proceed to a formal application. According to Experian UK (2026), a hard credit check typically causes a small temporary dip. The dip recovers over several months of regular repayments.
How quickly can I get approved for car refinancing?
Same-day eligibility decisions are common with online brokers. Once documents are ready, the full process takes 1 to 5 working days. The main delay is the current lender's settlement figure. Under Consumer Credit Act 1974 Section 97, this figure is supplied on request and stays valid for 28 days.
What is car refinancing?
Car refinancing replaces an existing car finance agreement with a new one secured against the same vehicle. The new lender pays off the original loan. You then make monthly payments to the new lender under fresh terms. Refinancing applies to HP and PCP agreements and usually targets a lower APR or monthly payment.
How does car refinancing work?
Car refinancing works in four steps:
- Request a settlement figure under Section 97 of the Consumer Credit Act 1974.
- Compare new refinancing offers and apply through a broker or lender.
- The new lender pays off the existing agreement directly.
- Your new monthly payments begin under the refinanced terms.
What are the pros and cons of car refinancing?
The main pros: a lower APR cuts your monthly payment. PCP refinancing solves the balloon payment problem. An improved credit score may qualify you for cheaper rates.
The main cons: early repayment charges may erode the saving. Extending the term raises total interest. HP voluntary termination rights reset under the new agreement.
Am I eligible for car refinancing?
Most UK refinancing lenders require five conditions. You must be aged 18 to 75 and a UK resident. You need a regular income, a valid UK driving licence, and at least 12 months into your current agreement. There is no minimum credit score on the Car-Finance.co.uk panel.
Could car refinancing save me money?
Yes, when the new APR plus any fees costs less than the remaining interest on your existing agreement. Refinancing saves money only when the new APR plus fees costs less than the remaining interest on the existing deal. Always compare total cost of credit, not monthly payment alone.
Check your refinancing eligibility
Soft credit search only. A full credit check will be carried out by the lender if you proceed to a formal application.
How we make money
We receive a commission from lenders when we arrange finance on your behalf. This does not affect the rate you are offered. The service is free to you. Learn more about how we make money.
Explore other car finance options
Car-Finance.co.uk is a trading name of Moneyrepublic Ltd (Company No. 12141408, FCA FRN: 967024). We are an Appointed Representative of F&I Online Ltd (FCA No. 731217), which is authorised and regulated by the Financial Conduct Authority. We are a credit broker, not a lender. All finance is subject to status and credit checks. Information verified as of May 2026. Check the FCA register for current regulatory status.